The Projects for Assistance in Transition from Homelessness (PATH) program provides the states and territories with funds to serve homeless individuals who are seriously mentally ill or dually diagnosed with serious mental illness and substance abuse disorders. As part of the mandate of the authorizing legislation, the General Accounting Office evaluated the PATH program, interviewing officials; reviewing grant applications and fiscal year 1991 and 1992 annual reports from California, Florida, Illinois, New York, and Texas; and visiting two local providers. Evaluation indicated that the Department of Health and Human Services has implemented appropriate program controls to help ensure that PATH expenditures are consistent with the 1990 amendments to the McKinney Homeless Assistance Act. In the five states that were studied, state grant procedures, financial oversight, and provider monitoring also help ensure that PATH services reach the target population. Local providers' mental health assessments further ensure that PATH services reach the target population. Four appendixes describe the scope and methodology of this report, including a chart of state and territory allotments for fiscal years 1992 and 1993 and a list of major contributors to the report. Contains a four-item list of related GAO products. (SLD)